SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period Ended December 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File No. 0-9407
REHABILICARE INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 41-0985318
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1811 OLD HIGHWAY 8
NEW BRIGHTON, MINNESOTA 55112
(Address of principal executive offices)
(651) 631-0590
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of February 8, 2002 was:
COMMON STOCK, $.10 PAR VALUE 10,913,458 SHARES
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
The following Quarterly Report on Form 10-Q contains various "forward looking
statements" within the meaning of federal securities laws. These forward looking
statements represent management's expectations or beliefs concerning future
events, including statements regarding anticipated product introductions;
changes in markets, customers and customer order rates; changes in third party
reimbursement rates; expenditures for research and development; growth in
revenue; taxation levels; and the effects of pricing decisions. When used in
this 10-Q, the words "anticipate," "believe," "expect," "estimate" and similar
expressions are generally intended to identify forward-looking statements. These
and other forward looking statements made by the Company must be evaluated in
the context of a number of factors that may affect the Company's financial
condition and results of operations, including, but not limited to, the
following:
- Like many medical device companies, the Company has a large balance of
uncollected receivables. If it cannot collect an amount of receivables that
is consistent with historical collections, it might be required to charge
off a portion of uncollected receivables, significantly impacting earnings.
- In the United States, the Company's products are subject to reimbursement
by private and public healthcare reimbursement agencies that impose limits
on reimbursement and strict rules on applications for reimbursement.
Changes in the rates, eligibility or requirements for reimbursement, or
failure to comply with reimbursement requirements, could cause a reduction
in earnings or fines or both.
- The Company maintains significant amounts of inventory on consignment at
clinics and for distribution to patients. It may not be able to completely
control losses of this inventory and if inventory losses are not consistent
with historical experience, it might be required to write off a portion of
the carrying value of inventory.
- The clinical effectiveness of the Company's electrotherapy products has
periodically been challenged. Publicity about the effectiveness of
electrotherapy for pain relief or other clinical applications could
negatively impact sales and earnings.
- The Company has periodically been the subject of litigation that has caused
it additional expense, including a Medicare whistleblower suit settled in
2000 for approximately $1.6 million and, currently, a $2.3 million product
liability suit that proceeded to a default judgment without the Company's
knowledge. The costs of these actions, and other actions that may arise,
have negatively affected, and may continue to negatively affect, the
Company's operating results.
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Included herein is the following unaudited condensed financial
information:
Consolidated Balance Sheets as of December 31, 2001 and June 30,
2001
Consolidated Statements of Operations for the three months and
six months ended December 31, 2001 and 2000
Consolidated Statements of Cash Flows for the six months ended
December 31, 2001 and 2000
Notes to Consolidated Financial Statements
3
REHABILICARE INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, June 30,
2001 2001
------------ ------------
ASSETS
Current Assets:
Cash and cash equivalents $ 2,564,561 $ 759,611
Receivables, less reserve for uncollectible accounts of $8,951,393 20,350,583 18,998,132
and $8,062,378
Inventories -
Raw materials 2,389,059 2,039,665
Work in process 67,152 55,895
Finished goods 6,999,747 6,552,155
Deferred tax assets 4,075,317 4,075,317
Prepaid expenses 1,498,329 2,156,646
------------ ------------
Total current assets 37,944,748 34,637,421
Property, plant and equipment, net 4,909,458 5,025,969
Intangible assets, net 11,117,252 11,250,761
Deferred tax assets 479,225 460,985
Other assets 125,834 120,735
------------ ------------
$ 54,576,517 $ 51,495,871
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Note payable $ 2,000,000 $
Current maturities of long-term debt 2,385,801 2,430,173
Accounts payable 3,378,274 3,977,308
Accrued liabilities -
Payroll 581,474 787,314
Commissions 354,309 338,491
Income taxes 1,973,155 1,631,710
Other 3,109,992 3,080,551
------------ ------------
Total current liabilities 13,783,005 12,245,547
Long-Term Liabilities:
Long term-debt 8,586,146 10,433,542
Deferred tax liabilities 385,858 357,566
------------ ------------
Total liabilities 22,755,009 23,036,655
Stockholders' Equity:
Common stock, $.10 par value: 25,000,000 shares authorized; 1,084,409 1,079,206
issued and outstanding 10,844,090 and 10,792,060 shares,
respectively
Preferred stock, no par value; 5,000,000 shares authorized; none
issued and outstanding -- --
Additional paid-in capital 21,539,544 21,420,378
Less note receivable from officer/stockholder (168,417) (189,417)
Unearned compensation on restricted stock (132,188) (186,563)
Accumulated other non-owner changes in equity (109,898) (689,459)
Retained earnings 9,608,058 7,025,071
------------ ------------
Total stockholders' equity 31,821,508 28,459,216
------------ ------------
$ 54,576,517 $ 51,495,871
============ ============
4
REHABILICARE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
December 31 December 31
-------------------------------- --------------------------------
2001 2000 2001 2000
------------ ------------ ------------ ------------
Net sales and rental revenue $ 17,533,144 $ 15,028,717 $ 33,631,872 $ 30,096,364
Cost of sales and rentals 6,029,483 4,646,357 11,176,958 9,396,197
------------ ------------ ------------ ------------
Gross profit 11,503,661 10,382,360 22,454,914 20,700,167
Operating expenses:
Selling, general and administrative 8,468,506 8,047,110 16,492,790 15,764,117
Research and development 459,957 481,563 1,102,263 839,906
------------ ------------ ------------ ------------
Total operating expenses 8,928,463 8,528,673 17,595,053 16,604,023
------------ ------------ ------------ ------------
Income from operations 2,575,198 1,853,687 4,859,861 4,096,144
Other income (expense):
Interest expense (180,049) (333,821) (415,200) (712,720)
Other 5,815 16,219 10,326 28,839
------------ ------------ ------------ ------------
Income before income taxes 2,400,964 1,536,085 4,454,987 3,412,263
Income tax provision 1,009,000 714,000 1,872,000 1,468,000
------------ ------------ ------------ ------------
Net income $ 1,391,964 $ 822,085 $ 2,582,987 $ 1,944,263
============ ============ ============ ============
Net income per common and
common equivalent share
Basic $ 0.13 $ 0.08 $ 0.24 $ 0.18
============ ============ ============ ============
Diluted $ 0.12 $ 0.08 $ 0.23 $ 0.18
============ ============ ============ ============
Weighted average number of shares
outstanding
Basic 10,825,500 10,764,487 10,820,723 10,743,862
============ ============ ============ ============
Diluted 11,183,703 10,778,078 11,105,191 10,762,378
============ ============ ============ ============
5
REHABILICARE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
December 31
---------------------------------
2001 2000
----------- -----------
Operating Activities:
Net income $ 2,582,987 $ 1,944,263
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 764,991 1,283,935
Amortization of unearned compensation 54,375 187,583
Change in long-term portion of deferred taxes 10,045 --
Changes in current assets and liabilities
Receivables (1,094,505) 277,495
Inventories (608,950) 341,222
Prepaid expenses 787,341 (789,613)
Accounts payable (840,533) (187,169)
Accrued liabilities 56,479 (771,045)
----------- -----------
Net cash provided by operating activities 1,712,230 2,286,671
=========== ===========
Investing Activities:
Purchases of property and equipment (430,552) (235,929)
Change in other assets, net 4,803 (625,992)
----------- -----------
Net cash used in investing activities (425,749) (861,921)
----------- -----------
Financing Activities:
Principal payments on long-term obligations (1,870,768) (1,885,157)
Proceeds from (payments on) line of credit, net 2,000,000 (800,000)
Proceeds from exercise of stock options 73,494 455,000
Proceeds from employee stock purchase plan 50,875 59,657
----------- -----------
Net cash provided by (used in) financing activities 253,601 (2,170,500)
----------- -----------
Effect of exchange rates on cash and cash equivalents 264,868 29,279
----------- -----------
Net increase (decrease) in cash and cash equivalents 1,804,950 (716,471)
Cash and Cash Equivalents at Beginning of Period 759,611 2,227,352
----------- -----------
Cash and Cash Equivalents at End of Period $ 2,564,561 $ 1,510,881
=========== ===========
Supplemental Cash Flow Information
Interest paid $ 415,200 $ 712,708
=========== ===========
Income taxes paid $ 1,601,019 $ 1,653,728
=========== ===========
6
REHABILICARE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2001
1. Accounting Policies
The amounts set forth in the preceding financial statements are unaudited as of
and for the periods ended December 31, 2001 and 2000 but, in the opinion of
management, reflect all adjustments (consisting only of normal recurring
adjustments) necessary for a fair statement of the results for the periods
presented. Such results are not necessarily indicative of results for the full
year. The accompanying financial statements of the Company should be read in
conjunction with the audited consolidated financial statements for the year
ended June 30, 2001 included in the Company's Annual Report on Form 10-K.
Certain previously reported amounts have been reclassified to conform to
classifications adopted in fiscal year 2001. These reclassifications had no
effect on net income, cash flows or stockholders' equity.
2. Recently Issued Accounting Standards
In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets, effective for fiscal years beginning after
December 15, 2001, with early adoption permitted for companies with fiscal years
beginning after March 15, 2001. Under the new rules, goodwill and intangible
assets deemed to have indefinite lives will no longer be amortized but will be
subject to annual impairment tests in accordance with the statements. Other
intangible assets will continue to be amortized over their useful lives.
The Company adopted the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of fiscal 2002. Amounts
previously recorded as separately identifiable intangibles for acquired work
force and customer list have been subsumed to goodwill in accordance with FAS
141, increasing goodwill by $1.6 million as of the date of adoption. Effective
with the July 1, 2002 adoption of FAS 142, goodwill is no longer amortized but
is instead subject to an annual impairment test. The transitional impairment
test conducted in connection with the adoption of FAS 142 resulted in no
impairment being required.
Goodwill and other intangible assets resulting from acquisitions of business and
the formation of the Company consist of the following:
As of As of
June 30, 2001 December 31, 2001
------------- -----------------
Goodwill $11,504,520 $11,504,520
Less accumulated amortization 1,671,430 1,671,430
----------- -----------
Net goodwill 9,833,090 9,833,090
----------- -----------
Other intangible assets: 1,783,686 1,783,686
Less accumulated amortization 366,015 499,524
----------- -----------
Net other intangible assets 1,417,671 1,284,162
----------- -----------
Total intangible assets, net $11,250,761 $11,117,252
=========== ===========
7
With the adoption of FAS 142, the Company ceased amortization of goodwill as of
July 1, 2001. The following table presents the results of the Company for all
periods presented on a comparable basis:
Six Months Ended Six Months Ended
December 31, 2001 December 31, 2000
----------------- -----------------
Reported net income attributed to
common shareholders $ 2,582,987 $ 1,944,263
Add back goodwill amortization, net of
tax provision -- 237,512
------------- -------------
Adjusted net income attributed to
common shareholders $ 2,582,987 $ 2,181,775
============= =============
Diluted net income per share:
Reported net income attributed to
common shareholders $ .23 $ .18
Goodwill amortization -- .02
------------- -------------
Adjusted net income attributed to
common shareholders .23 .20
============= =============
3. Note Payable and Long Term Debt
The Company has a $20,000,000 credit facility which provides for both term and
revolving borrowings at varying rates based either on the bank's prime rate or
LIBOR. As of December 31, 2001, there were borrowings outstanding of $9,097,000
under the long-term note and $2,000,000 under the revolving credit line.
Borrowings under the credit facility are secured by substantially all of the
U.S. assets of the Company other than those pledged as collateral on existing
lease or mortgage obligations. The interest rate on the term loan was 4.56% at
December 31, 2001 and the weighted average rate on borrowings under the
revolving line of credit was 5.88%.
The Company was in compliance with all financial covenants of its credit
agreement as of December 31, 2001 and for the period then ended.
8
4. Segment Information
Rehabilicare and its consolidated subsidiaries operate in one reportable
segment, the manufacture and distribution of electromedical pain management,
rehabilitation and sports training products. The Company's chief operating
decision makers use consolidated results to make operating and strategic
decisions. Net revenue from the United States and foreign sources (primarily
Europe) are as follows:
For the Six Months Ended
December 31
---------------------------------
2001 2000
----------- -----------
U.S. revenue $22,480,856 $21,692,082
Foreign revenue 11,151,016 8,404,282
----------- -----------
$33,631,872 $30,096,364
=========== ===========
Net revenue by product line was as follows:
For the Six Months Ended
December 31
---------------------------------
2001 2000
----------- -----------
Rehabilitation products $ 6,998,031 $ 6,139,659
Pain management 6,918,857 6,990,371
Consumer Products 8,168,861 5,997,539
Accessories and supplies 11,546,123 10,968,795
----------- -----------
$33,631,872 $30,096,364
=========== ===========
During the first six months of fiscal 2002 and 2001, one customer accounted for
approximately 16% and 15%, respectively, of total consolidated revenue. This
customer represented approximately 5% of total accounts receivable at December
31, 2001.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company designs, manufactures and distributes electrotherapy
products used for pain management, rehabilitation and sports training.
Its products are used in clinical, home health care, sports medicine
and occupational medicine applications. It also distributes other
medical products used in related applications. The Company operates in
one business segment, distributing its products through sales to
medical product dealers and distributors, sport shops and, in the
United States and the United Kingdom, through direct rental or sale to
patients.
The direct rental or sale approach in the United States involves
placing electrotherapy units with physicians, physical therapists and
other health care providers who then refer those units to patients
after determining an appropriate treatment regimen. Units are left on
consignment with the health care providers for such referral. The
Company then bills the patient or the patient's insurance carrier
directly after being notified that a unit has been prescribed and
provided to the patient. The Company takes responsibility for
subsequent patient follow-up, including extension of the rental period,
sale of the unit, if appropriate, and sale of additional supplies
required for continued use of the electrotherapy units. This
distribution approach requires the Company to maintain significant
investments in inventories and receivables.
10
RESULTS OF OPERATIONS
The following table sets forth information from the statements of operations as
a percentage of revenue for the periods indicated:
Three Months Ended Six Months Ended
December 31 December 31
----------------------- -----------------------
2001 2000 2001 2000
----- ----- ----- -----
Net sales and rental revenue 100.0% 100.0% 100.0% 100.0%
Cost of sales and rentals (34.4) (30.9) (33.2) (31.2)
Gross profit 65.6 69.1 66.8 68.8
Operating expenses -
Selling, general and administrative (48.3) (53.6) (49.0) (52.4)
Research and development (2.6) (3.2) (3.3) (2.8)
----- ----- ----- -----
Total operating expenses (50.9) (56.8) (52.3) (55.2)
----- ----- ----- -----
Income from operations 14.7 12.3 14.5 13.6
Other income (expense), net (1.0) (2.0) (1.2) (2.2)
Income tax provision (5.8) (4.8) (5.6) (4.9)
----- ----- ----- -----
Net income 7.9 5.5 7.7 6.5
===== ===== ===== =====
Revenue was $17,533,000 for the second quarter of fiscal 2002, a 17% increase
from $15,029,000 for the second quarter of fiscal 2001. Revenue for the six
months ended December 31, 2001 increased 12% to $33,632,000 from $30,096,000 in
the first six months of fiscal 2001. The largest component of those increases
was the Company's Compex operation where revenue increased 54% in the second
quarter and 35% in the first six months of fiscal 2002 over the same periods in
fiscal 2001. Compex's revenue increases resulted from volume increases in all
markets, particularly Spain. Revenue from U.S. operations was up 4% in the
second quarter and first six months of fiscal 2002 compared to the same period
in fiscal 2001. Increases in revenue from direct rental or sale to patients of
11% in the second quarter and 9% in the first six months resulted primarily from
increased sales of units and supplies. Those increases were offset by declines
in sales to medical product dealers and distributors as many of them converted
some of their purchases to lower priced, often imported, units.
Gross profit was $11,504,000 or 65.6% of revenue in the second quarter and
$22,455,000 or 66.8% of revenue for the first six months of fiscal 2002,
compared with $10,382,000 or 69.1% of revenue in the second quarter and
$20,700,000 or 68.8% of revenue for the first six months of fiscal 2001. The
decline in the gross margin percentage resulted from continued growth of Compex
revenue as a percent of total revenue and further reductions in the Compex gross
margin percentage as a result of changes in product mix toward lower price sport
and fitness products. Overall margins are expected to continue in the mid-
sixties.
11
Selling, general and administrative expenses increased 5% to $8,469,000 in the
second quarter of fiscal 2002 from $8,047,000 in fiscal 2001. As a percent of
revenue, those expenses declined to 48% in the second quarter of fiscal 2002
from 54% in fiscal 2001. For the six months ended December 31, 2001, selling,
general and administrative expenses increased 5% to $16,493,000 from $15,764,000
in fiscal 2001. As a percent of revenue, those expenses declined to 49% during
the first six months of fiscal 2002 from 52% in fiscal 2001. The declines result
from Compex expenses increasing at a rate slower than the related increase in
its revenue as newer markets achieve significant growth. In the U.S., those
expenses are essentially unchanged as a percent of revenue after adjusting for
the effect of discontinuing amortization of goodwill as described in Note 2 to
the financial statements.
Research and development expense decreased 5% to $460,000 in the second quarter
of fiscal 2002. In the six months ended December 31, 2001, those costs increased
31% to $1,102,000 compared to $840,000 in fiscal 2001. The increase in the
six-month period reflects the cost of new product development activities both in
the U.S. and Compex operations. The most significant project in the U.S. was the
new ProMax TENS unit which started production in October 2001. In Europe, three
new products have been introduced in the last nine months. The Company
anticipates that research and development expenses will remain relatively
constant as a percentage of revenue in future periods.
Interest expense decreased 46% from $334,000 in the first quarter of fiscal 2001
to $180,000 in the first quarter of fiscal 2002 and decreased 42% from $713,000
in the first six months of fiscal 2001 to $415,000 in fiscal 2002. The decreases
resulted from lower interest rates and overall lower borrowings on the Company's
credit facility. The Company expects interest expense to continue to decline
with the lower overall balance of its indebtedness.
The provision for income taxes is 42% of income before taxes for the first six
months of fiscal 2002 compared to 43% for the same period of fiscal 2001. The
Company operates in various countries in Europe as well as the United States.
Some countries have higher tax rates than the United States as well as different
rules on the deductibility of certain expenses and the availability of certain
credits for taxes paid to other jurisdictions. The Company believes that 42% is
a reasonable estimate of the effective rate for fiscal 2002 based on most recent
estimates of expected sources of revenue and expenses for the entire year and
1998. The Internal Revenue Service has recently completed an examination of the
Company's federal income taxes for the years ended June 30, 1997 and has
proposed adjustments pursuant to such audit, most of which relate to the timing
of revenue or expense recognition. The Company is contesting certain proposed
adjustments and believes its provision for income taxes and related reserves are
adequate.
As a result of the above activity, net income increased from $822,000 in the
second quarter of fiscal 2001 to $1,392,000 in the second quarter of fiscal
2002. For the six months ended December 31, 2001, net income increased to
$2,583,000 from $1,944,000 during the same period in fiscal 2001. Diluted
earnings per share increased from $.08 to $.12 for the second quarter and $.18
to $.23 per share for the six month period.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended December 31, 2001, the Company's operations provided
cash of $1,712,000, mainly from net income of $2,583,000 less the net increase
in current assets. Prepaid expenses declined due to lower value added tax
prepayments by Compex. Inventories increased $609,000, primarily for the
12
build-up of raw materials and finished goods for new product lines at Compex.
Accounts receivable increased $1,094,000, mainly from higher sales at Compex.
The decrease in accounts payable relates to timing differences and the payment
of year-end accruals.
The Company used $426,000 in investing activities for the first six months of
fiscal 2002 for net purchases of property and equipment, including clinical and
rental equipment.
The Company's financing activities provided $254,000 of cash during the first
six months of fiscal 2002, mainly from borrowings under its $20,000,000 credit
facility, net of $1,871,000 that was used for repayment of long-term debt under
that facility. Borrowings were used primarily to build inventories in connection
with new product introductions. At December 31, 2001, a total of $11,097,000 is
outstanding under this facility, including $2,000,000 of short-term debt under
the revolving line of credit.
Managing receivables represents one of the biggest business challenges to the
Company. The process of determining what products will be reimbursed by third
party payors and the amounts to be paid for those products is very complex and
the reimbursement environment is constantly changing. That risk is spread across
many payors throughout the United States. The determination of an appropriate
reserve for uncollectible accounts at the end of each reporting period includes
various factors including historical trends and relationships and experience
with insurance companies or other third party payors. The Company believes that
the reserve at December 31, 2001 is adequate to cover future losses on its
receivables based on collection history and trends. The provision for
uncollectible accounts recorded in the income statement may continue to
fluctuate significantly from quarter to quarter as such trends change. The
reserve was 30.5% of receivables at December 31, 2001 compared to 29.8% at June
30, 2001.
The Company has no material commitment for capital expenditures. The Company
believes that available cash and borrowings under its credit line will be
adequate to fund cash requirements for the current fiscal year.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk from changes in the interest
rates on certain of its outstanding debt. The outstanding loan balance
under the $20 million credit facility bears interest at a variable rate
based on the bank's prime rate or LIBOR. Based on the average
outstanding bank debt for the period ended September 30, 2001, a 100
basis point change in interest rates would not change interest expense
by a material amount.
13
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In late January 2001, Rehabilicare was served with documents in
connection with a product liability case brought in the California
Superior Court for Solano County. Until receipt of these documents,
Rehabilicare had no record of the proceedings. The case involved a
product liability claim for burns allegedly suffered by plaintiff
through the use of a stimulation unit that was allegedly manufactured
by Rehabilicare. The action alleged damages for medical expenses of
approximately $1,000, for future medical expenses of approximately
$270,000 and for punitive damages and pain and suffering of
approximately $2,000,000. The action progressed to the entry of a
default judgment on January 11, 2001 against Rehabilicare for failing
to respond to pleadings.
In March 2001, Rehabilicare moved in Solano County court to set aside
the default judgment on various grounds, including irregularities in
the filings and other matters. Because the appeal period with respect
to the default judgment would have lapsed prior to the hearing on its
motion in Solano County, Rehabilicare also appealed the judgment to the
California Court of Appeals. The Solano County Court refused to act on
Rehabilicare's motion because of the pendency of the appeal.
Rehabilicare believes the judgment is void or otherwise improper, has
obtained a stay of execution of the judgment in both California and
Minnesota and intends to vigorously pursue available actions, including
its appeal, to set aside the judgment.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS - None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - None
ITEM 5. OTHER INFORMATION - None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None filed during the quarter ended December 31, 2001
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REHABILICARE INC.
February 14, 2002 /s/ David B. Kaysen
--------------------------- --------------------------------------------
Date David B. Kaysen
President and Chief Executive Officer
February 14, 2002 /s/ W. Glen Winchell
--------------------------- --------------------------------------------
Date W. Glen Winchell
Vice President of Finance
(Principal Financial and Accounting Officer)
15